Fuel giant Greenergy plots rescue bid for P&H

The new owner of one of Britain’s biggest fuel networks is plotting a rescue bid for Palmer & Harvey (P&H), the tobacco distributor which supplies tens of thousands of stores across the UK.

Sky News has learnt that Brookfield Business Partners, which this week completed a takeover of the road-fuel supplier Greenergy, is among a number of parties which have tabled offers for P&H in recent days.

A turnaround unit of Carlyle, the private equity giant, has also registered a bid, according to insiders.
The deadline for bids comes as P&H attempts to recruit new investors to help thrash out a long-term agreement with two of the world’s biggest tobacco manufacturers.
P&H, which employs about 4,000 people, is the biggest tobacco distributor in Britain, supplying all of Tesco’s stores and thousands of others owned by rival supermarkets such as Sainsbury’s.
Brookfield’s interest in P&H is said to reflect an interest in exploiting Greenergy’s vast distribution network and expertise.
Greenergy, which describes itself as the UK’s only national fuel supplier, already delivers to supermarkets and independent forecourt operators across the country.

Image: P&H supplies all of Tesco’s stores
A rescue of P&H is far from inevitable, with talks about a refinancing only having been completed a few months ago.
If the company collapsed, however, it would create huge supply chain headaches for Imperial Brands and Japan Tobacco International, which between them own brands such as L&B and Silk Cut.
Sky News revealed in the spring that the two companies had hired Deloitte and EY, the accountancy firms, to advise them on the future of P&H, which owes them tens of millions of pounds.
One insider said on Friday that they were unlikely to end up owning P&H outright but would play a critical role in the outcome of the current sale process.
Sainsbury’s has also explored a bid for P&H, and having recently terminated exclusive discussions to buy Nisa Retail, a convenience store wholesaler and retailer, it could yet return to the fray.
The chain has already provided some support to P&H through its trading finance platform, which effectively enables suppliers to borrow money cheaply from it.

The entire sector is in a state of flux following Tesco’s agreed £3.7bn takeover of Booker, the wholesale giant, and was already experiencing a seismic shift because of growing competition from with online-only retailers.
Competition regulators are examining the Tesco-Booker deal, and have said they will take into account its likely impact on P&H.
The independently owned delivered wholesale only recently signed an extension to its supply agreement with Tesco, which accounts for roughly 40% of P&H’s revenues.

Image: Deloitte is among the accountancy firms the bidders have hired for advice
P&H hired PricewaterhouseCoopers (PwC) to oversee a sale process amid pressure from Imperial Brands and JTI to secure a long-term solution.
In April, the two tobacco companies agreed to lend substantial multi-million pound sums to P&H to secure its immediate future.
P&H is one of the UK’s biggest private companies by sales, and among the largest to be owned by current and former employees.
Lenders to it, which include Barclays and Royal Bank of Scotland, had become increasingly anxious about the potential ramifications of Tesco’s proposed £3.7bn acquisition of Booker.
P&H was established in 1925 as a tobacco and sweets wholesaler, and is the biggest distributor to the UK’s convenience sector.
Serving about 90,000 outlets across the country, it uses a fleet of 1,300 vehicles.
The company is run by Tony Reed, a former boss of Tesco’s convenience retailing business, who joined last year.
A spokesperson for P&H said: “The process of exploring our options is progressing well. Having received expressions of interest from a number of parties, we are confident of a successful outcome.”
Carlyle declined to comment, while Brookfield Business Partners could not be reached.